Delhi High Court
Indcare&Karma; vs North Delhi Municipal ... on 27 March, 2019
$~4
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P.813/2018
Date of Decision : 27th March, 2019
INDCARE&KARMA ..... Petitioner
Through: Mr.Manikya Khanna, Adv.
versus
NORTH DELHI MUNICIPAL CORPORATION & ANR.
..... Respondents
Through: Ms.Supreet Bambra, Mr.Sunil
Goel, Mr.Mayank Goel, Advs.
for NDMC.
Mr.Dhanesh Relan, Mr.Rajeev
Jha and Ms.Gauri Chaturvedi,
Advs. for SDMC.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
1. This petition has been filed under Section 11 of the Arbitration
and Conciliation Act, 1996 (hereinafter referred to as the „Act‟)
seeking appointment of an Arbitrator for adjudicating the disputes that
have arisen between the parties in relation to the Agreement dated
05.11.2008 executed between the petitioner and the erstwhile
Municipal Corporation of Delhi.
Arb.P. 813/2018 Page 1
2. The said Agreement contained an Arbitration Agreement in
form of Clause 35 thereof which is reproduced hereinbelow:
"35. In case of any dispute, arising out of the operation
of the above agreement, such disputes shall be referred
to an arbitrator td be appointed by the Commissioner,
MCD whose decision/award shall be final and binding
on the both parties. However, the arbitration clause can
be invoked only after both the parties have failed to
arrive at any settlement in the re-conciliation
proceedings. In case the arbitrator to whom the matter
is originally referred is unable to act on account of
being transferred, vacating his office or any other
reason, Commissioner, MCD, and the second party shall
have the right to mutually appoint any other person to
act as arbitrator, in lieu."
3. Learned counsel for the petitioner submits that upon trifurcation
of the erstwhile Municipal Corporation of Delhi, the rights and
obligations under the Agreement have been vested in the respondent
no.1 and respondent no.2.
4. The disputes having arisen between the parties, the petitioner
first filed a Writ Petition before this Court, being WP(C) 5071/2018
titled Indcare & Karma v. North Delhi Municipal Corporation &
Anr.
5. This Court by its order dated 11.05.2018 allowed the petitioner
to withdraw the said Writ Petition and gave liberty to the petitioner to
resort to arbitration.
Arb.P. 813/2018 Page 2
6. The petitioner thereafter invoked the Arbitration Agreement
vide its notice dated 06.08.2018. Having failed to receive any
response from the respondents, the present petition was filed.
7. Reply has been filed only by respondent no.1. It is contended
by counsel for the respondent no.1 that the present petition is not
maintainable as the petitioner has not shown if it is a registered
Partnership Firm. In absence of such proof and in terms of Section
69(3) of the Indian Partnership Act, 1932, the present petition would
not be maintainable.
8. She further submits that the claim of the petitioner would be
barred by law of limitation. She submits that in the present case, the
South Delhi Municipal Corporation, that is, respondent no.2 had
terminated the Agreement vide letters dated 31.07.2013 and
30.08.2013. In terms of Section 478(2) of the Delhi Municipal
Corporation Act, 1957 (DMC Act), the period of limitation for filing a
suit would be six months from the date when the cause of action
arises. In any case, the Agreement having been terminated by the
letters dated 31.07.2013 and 30.08.2013 and arbitration having been
invoked only on 06.08.2018, the claim would be barred by limitation
under the Limitation Act, 1963.
9. I have considered the submissions made by the learned counsel
for the respondent no.1.
10. As far as the issue of the petitioner being an unregistered
Partnership Firm, the same is no longer res integra.
Arb.P. 813/2018 Page 3
11. In Umesh Goel v. Himachal Pradesh Cooperative Group
Housing Society Limited, (2016) 11 SCC 313, the Supreme Court has
clarified that the arbitral proceedings will not come under the
expression "other proceedings" in Section 69(3) of the Partnership
Act, and the ban imposed under the Section 69 of the Partnership Act
can have no application to the arbitral proceedings as well as
arbitration award.
12. As far as the plea of limitation based on Section 478(2) of DMC
Act is concerned, this Court by its judgment in Well Protect
Manpower Services Pvt. Ltd. v. Commissioner Municipal
Corporation of Delhi & Anr., ILR (2012) 2 Delhi 183 has clarified as
under:
"7.....Section 478(2) of the Delhi Municipal
Corporation Act provides for a limitation of six months
in respect of any act done or purported to have been
done in pursuance of the provisions of the Act or any
rules, regulation or bye-law made thereunder. The test
to be applied for such determination is: Whether the act
was done in statutory capacity or has the act been
performed under the colour of statutory duty? Section
478(2) shall apply, if the act is done or purported to
have been done in pursuance of the provisions of the Act
or any rules, regulation or bye-law made thereunder."
13. In the present case, the contract between the parties is for
Operation and Maintenance of 439 Community Toilet Complexes for
a period of seven years. The claim of the petitioner is towards the
refund of the security amount under the Agreement as also for alleged
Arb.P. 813/2018 Page 4
excess payment made by the petitioner under the Agreement. These
claims do not fall under the ambit of Section 478(2) of the DMC Act
as explained in the above referred judgment.
14. As far as the objection of limitation based on provisions of
Limitation Act, 1963, learned counsel for the petitioner submits that
the cause of action subsists as South Delhi Municipal Corporation
could not have alone terminated the Agreement and therefore, the
Agreement terminated only by efflux of time in November, 2015,
thereby making the invocation of the arbitration within the period of
limitation.
15. In my view, the question of limitation has to be determined by
the Arbitral Tribunal taking into account the pleadings and evidence
led by the parties before the Arbitral Tribunal. In terms of Section
11(6A) of the Act, this Court at the present stage is to confine its
scrutiny only to the existence of the Arbitration Agreement and due
invocation thereof. As the existence of the Arbitration Agreement and
due invocation thereof has not been denied by the respondents, I see
no impediment in appointing an Arbitrator for adjudicating the
disputes that have arisen between the parties in relation to the
abovementioned Agreement.
16. At this stage, I may also record the objection raised by the
counsel for the respondent no.2. Though, respondent no.2 neither
responded to the notice invoking arbitration nor has chosen to file the
reply to the present petition, counsel for the respondent no.2 submits
that all rights and obligations under the Agreement were assigned only
Arb.P. 813/2018 Page 5
to respondent no.1. In absence of any document being filed on record
to substantiate this claim, it would not be proper for this Court to enter
into this determination at this stage. Respondent no.2 shall be free to
take such plea in its defence before the Arbitrator.
17. With the consent of the parties, the parties are referred to the
Delhi International Arbitration Centre (DIAC), where they shall
appear on 08.04.2019 at 2.00 p.m. DIAC shall appoint a Sole
Arbitrator for adjudicating the disputes between the parties.
18. The arbitration and the fee shall be governed by the rules of the
DIAC.
19. With the above directions, the petition is disposed of.
Dasti.
NAVIN CHAWLA, J
MARCH 27, 2019/Arya
Arb.P. 813/2018 Page 6
